The S&P 500, DJIA, MidCap 400 and Value Like index also closed back above their near-term uptrend lines, turning said trends to positive from neutral.

We now find only the Dow Jones Transports and Russell 2000 in neutral trends with the rest positive.

We would also note that despite the sizable gains, none of the stochastic levels entered overbought territory.

The cumulative advance/decline lines for the All Exchange, NYSE and Nasdaq remain negative but above their 50-day moving averages. We suspect they will turn neutral shortly.

Digging Into the Data

The data remains mostly neutral although sentiment continues to be positive.

The one-day McClellan Overbought/Oversold Oscillators are still neutral on the All Exchange, Nasdaq and NYSE (All Exchange: +32.88 NYSE: +27.91 Nasdaq: +37.51).

The Open Insider Buy/Sell Ratio continues to be of interest as insiders increased their buying activity yet again, up to 98.7 while remaining neutral.

The detrended Rydex Ratio (contrary indicator) at +0.12 is also neutral.

This week's AAII Bear/Bull Ratio (contrary indicator) at 49.1/25.87 continues to send a bullish message as the crowd has yet to embrace the market's strength from the March lows.

The counterintuitive percentage of S&P 500 issues trading above their 50-day moving average is neutral at 58.8%.

Valuation

Valuation continues to be our largest concern, with the S&P 500 trading at a P/E of 22.9x consensus forward 12-month earnings estimates of $129.10 per share, versus the "rule of 20" fair value multiple of 19.3x. This suggests the S&P remains overvalued.

The S&P's forward earnings yield is 4.37% while the 10-year Treasury yield is 0.74%.

Our Outlook

While valuation is a concern, the improvements on the index charts combined with a lack of cautionary signals from the data suggest it is appropriate to return to our prior "neutral/positive" outlook from "neutral" for the major equity indices.

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At the time of publication, Ortmann had no positions in any securities mentioned.

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